Last Updated: 29 May 2021
James Bullard, the President of the Federal Reserve Bank, has said that most cryptocurrencies are worthless. According to him, cryptocurrencies can only become useful if they can facilitate transactions that are difficult to execute using traditional currency.
Statement of James Bullard
Federal Bank of St. Louis President James Bullar can’t see the value of most of the cryptocurrency. He says that most of the cryptocurrencies have no use and are worthless. He made this statement in an interview with Yahoo Finance on Friday while addressing the inflation risks. When asked about the volatility of the cryptocurrency, which we have seen over the past few weeks, Mr Bullard said that the reason for such huge fluctuations in cryptocurrency values is because of non-uniform currency and exchange rate chaos, which is caused by one of two reasons. One of these reasons is traditional currency competition, which is not a new thing in the market.
We have historically seen how currencies compete to gain an edge over the others. The issuance of one private currency is the cause of another personal currency emergence, too; this is what happened in the cryptocurrency scenario. As from one cryptocurrency, now there are several others. There are thousands of cryptocurrencies currently available in the market, among which most of them are worthless. Cryptocurrencies can only prove their value if they can execute difficult transactions that can’t be done via traditional currencies. This will help cryptocurrency to circulate with the nation-banked currencies.
He also reflected his thoughts on the current situation of the cryptocurrency market. He said that people see volatility in the digital currency market, which is not a big deal, as almost every privately issued currency faces this problem. He thinks this is not even the biggest of the problems. Moreover, he said that even this problem exists with the nation-issued currencies at times.
Most Cryptocurrencies Are Worthless
Mr Bullard also explained the cryptocurrency investment; he said that like every investment, cryptocurrency investment has its high and lows. One should study the market well before investing in digital currency, and analyzing the risks and benefits before the investment is what makes your investment a good investment. Although volatility is not a big issue for digital currency, this factor shouldn’t be ignored at all. Moreover, he said that cryptocurrency is not a problem for the US dollar now, and it didn’t push any changes in the federal bank’s policies.
With many cryptocurrencies in the market, it is also confusing for the investors which currency to invest in, especially since we have seen that the market is not stable these days. A few weeks ago, we saw a massive fall in the value of the world’s top two cryptocurrencies Bitcoin and Ethereum. This has caused some panic in many investors as they think that cryptocurrency will be dead soon. But James Bullard said that this rise and fall in the value of the cryptocurrency is not the biggest of the issues as these issues are even associated with the traditional currency. The real question is which one of these thousands of cryptocurrencies is worth investing in. According to Mr Bullard, cryptocurrency is only useful. It can have a promising future if it can resolve the transaction issues difficult for traditional currencies to deal with.